A former Bank of New York executive and her husband have pleaded guilty to money laundering charges in a scam purportedly linked to the Russian mafia.

Lucy Edwards and Peter Berlin admitted accepting $1.8m to set up a scheme to funnel Russian money through the bank.

Their guilty pleas were the first admissions in the case, which is thought to involve as much as $10bn.

Charges include:

Money laundering

Corrupt payments to bank officials

Conspriacy to defraud the IRD

Evading personal income tax

The charges were the most serious filed so far in the investigation, which began in 1998.

The Russian-born couple appeared in Manhattan federal court on Wednesday, a day after arriving from London to surrender to the FBI.

Britain's National Crime Squad - which is working with the FBI - said London had become a key centre for attempts to launder money from Russia and Eastern Europe.

Detective Chief Superintendent Neil Giles said: "All financial institutions in this country must continue to be alert for signs of such activity."

Ms Edwards, who had worked for Bank of New York in London, was fired last August after the investigation became public.

'Illicit purposes'

The couple admitted that between late 1995 and September 1999 they were part of a conspiracy that allowed money to be wired out of Russia avoiding customs duties and taxes. In exchange, they were paid a percentage of the money being transferred.

We were paid substantial commissions for doing very little work

Lucy Edwards

Ms Edwards said Russian bankers approached her in late 1995, and they agreed that her husband would open an account at the Bank of New York and obtain software allowing them to make wire transfers to the bank themselves.

Mr Berlin headed Benex International, the company that controlled the accounts used in transferring the money from Russia.

The accounts were also used, according to the charges read out on Wednesday, to pay ransom money after a Russian businessman was kidnapped.

Ms Edwards said she had been suspicious of the Russian banks.

"I was aware that personnel ... were on occasion in fear of their customers and afraid to leave the bank because they said customers with machine guns were waiting for them," she said.

She said "suspected the accounts were being used by many people for illicit purposes".

However she said: "I closed my eyes to that fact.

"We were paid substantial commissions for doing very little work."

Jail time

An alleged accomplice, Aleskey Volkov, remains a fugitive.

If convicted, Ms Edwards would face a maximum of five years in prison and a $250,000 fine.

Mr Berlin and Mr Volkov face additional charges of conducting an illegal money-transferring business and engaging in an illegal banking operation, and face up to 15 years in prison and a $175,000 fine.

Last week, state and federal banking regulators formally sanctioned the bank for deficiencies in its
anti-money-laundering practices. The bank agreed to make periodic reports to US banking regulators.